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Is healthcare reform in the cards with new socialist government in Spain

16 August 2018Ewa Oliveira da Silva

Ten weeks after the unseating of Spain's former Prime Minister
(PM) Mariano Rajoy, following a no confidence vote on 1 June, it is
clear that the cabinet of the Socialist Workers Party (Partido
Socialista Obrero Espanol: PSOE)'s Pedro Sánchez is going to
struggle to pass any major reforms. With only 84 of 350 seats in
the lower chamber of parliament, the PM recently lost a key vote on
the proposal to increase the national budget deficit targets, and
has already been accused of withdrawing from some of his early
promises such as revoking the 2012 labor market reform. However,
all of this does not seem to discourage Sánchez, who declares
that he intends to serve a full term in office and will not call
early elections. Since June, his party has gained support in polls
and despite some clear difficulties, there are also areas where the
government appears to have made significant strides. One of those
areas is public healthcare.

Importantly, not all reforms require the approval of Spain's
bicameral legislature (Cortes Generales). In a first significant -
although largely symbolic - step, on 27 July Sánchez's cabinet
approved a Royal Decree-Law (RDL; a bill issued directly by the
central government in situations of "extraordinary and urgent
need") removing the requirement for individuals to be "insured"
(i.e. have a regulated social security status, either via paid
work, unemployment benefit or similar) to access non-urgent public
health care services. Such requirement was introduced in 2012 by
RDL 16/2012 along with a raft of other austerity measures - most
notably, patient co-payments for medicines and the delisting of
more than 400 drugs from state reimbursement. The government has
trumpeted this change as "restoring the universal character of
healthcare" in Spain; in reality, the change will mostly affect
irregular foreign migrants who are ineligible for a work permit or
state benefits, and several autonomous communities had already
lifted these restrictions on their territories.

While the change may be small, the symbolism matters: the
Socialist government has officially begun to reverse the "cruel"
austerity policies implemented six years ago, and has done it
remarkably quickly since getting into power in early June. So are
there more changes to come, and if so - could they benefit the
pharma industry?

Despite the clear anti-austerity line of Pedro Sánchez and
his ministers, it looks like measures with a significant impact on
expenditure will not be implemented hastily. The (recently renamed)
Ministry of Health, Consumption and Social Welfare (MoHCSW)
maintains that making non-urgent healthcare available - under
certain conditions - to all will in fact save money by curbing
unnecessary, costly hospitalizations among previously excluded
groups. When announcing this first move, minister Carmen
Montón avoided forward-looking declarations by saying the
government was taking a "step-by-step" approach to reforming the
healthcare system, focusing on universal access first and seeking
"solutions to other issues" in parallel. One of those "issues"
which we know Montón herself feels strongly about are patient
co-payments for drugs, which can be up to 60% of the price of
prescription drugs depending on the patient's socioeconomic status.
Understandably, the co-payment has been hugely unpopular with
patients, and criticized by many commentators and the left side of
the political scene. A small number of autonomous communities have
issued their own exemption decrees for some groups of citizens,
leading to legal disputes with the central government; this
includes Valencia, where Carmen Montón served as regional
health minister before assuming the national role. Since June,
Montón has said on more than one occasion that the government
intends to scrap co-payments - however, only for pensioners, and
not until it considers it to be financially viable.

This is not surprising: according to government estimates
released last year, Spain saved EUR5.515 billion (USD6.514 billion)
between 2013 and 2016 in drug expenditure through the package of
cost-cutting measures implemented by RDL 16/2012, with the bulk of
this amount derived from co-payments. One way of enabling this kind
of expenditure is to make savings elsewhere, and it seems as though
Montón might already have an idea or two on how to do that.
Speaking at the Congress of Deputies about her department's
near-term priorities, Montón reportedly revealed that her
Ministry plans to introduce what appears to be a value-based
funding model for medicines. Montón was quoted as saying that
the proposals would "develop a model to determine the value
delivered by new medicines … in comparison with
alternatives". Among other solutions "under consideration" by the
MoHCSW that the minister reportedly mentioned are outcomes
measurement for high-impact drugs, centralized procurement, and
policies to stimulate the uptake of biosimilars and generics. In
addition, there are plans to modify the therapeutic positioning
reports (TPRs) - guidance documents prepared by the Spanish Agency
for Medicines and Health Products (AEMPS) for all newly approved
medicines - with a view to make them more relevant and binding for
all of the country's autonomous communities.

All these proposals appear to be geared towards a more
centralized, cost-effective and evidence-based pharmaceutical
policy. This could lead to both positive and negative consequences
for the pharmaceutical industry - and without concrete proposals
and timelines, it is too early to speculate. These are often
complex, difficult proposals to implement, and whilst the end-goal
is to ensure a more efficient and streamlined healthcare system,
there is a significant upfront cost and educational process, with
many different options to create evidence-based decision-making -
certainly, the pharmaceutical industry needs to ensure that its
voice is heard throughout the reform process. Notably, one issue
which has not been mentioned so far is the therapeutic reference
pricing system, which was subject of a planned reform announced by
the previous government in late 2017. Just days before the change
of government, Spanish health news portal Redacción
Médica reported that the draft of an updated RDL on reference
pricing, which was expected to include a more granular definition
of 'active ingredient' for the purpose of creating reference
clusters, was due to be published imminently for public
consultation. This hasn't happened, and whether the MoHCSW has
simply put it on the back burner awaiting review, or perhaps
discarded entirely, is not currently known.

Following years of austerity, an unstable government and the
recent escalation of the Catalan crisis with implications for
businesses and the economy, the healthcare and pharma sectors in
Spain are headed for yet more uncertainty. If there is one positive
takeaway from the past two months, it is the way the current
government and MoHCSW have been communicating their activities to
the public. Frequent - by previous standards - press releases on
the status of the "universal healthcare" bill and other issues may
indicate an era of more transparency and, hopefully, advance notice
when it comes to important reforms. But let us not forget that this
remains a minority, potentially fragile government, and any major
initiatives could easily be delayed or even reversed in the event
of early elections and another change of power, keeping policy
instability in Spain high.